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FTC settlement forces marketers out of debt-relief services

As many Washington, D.C., area residents know, debt is sometimes unavoidable when there is an emergency -- when a breadwinner loses a job or a medical emergency arises that demands quick payment by credit card. Although not quite as bad as a few years ago, these issues, job loss and medical expenses, remain the most common reasons why people find themselves barely treading water financially. Many end up seeking some form of debt relief. With literally scores of local and regional firms offering to help consumers move out of debt, the chances are that some of them may simply be scams.

That is what members of the Federal Trade Commission apparently believed about one group. In February, the group was forced out of the mortgage relief assistance industry. Most recently, on April 3, the FTC also banned an affiliated company from engaging in any mortgage -- or debt-relief endeavors because of criminal acts from its promotion of a fraudulent loan --modification operation.

Consumers were apparently swindled by paying large fees for alleged mortgage relief. The FTC says that consumers in various states were conned into paying from $500 to $3,900 for legal help that never appeared. Marketing materials sent to prospective victims, the FTC says, were made to look as if they came from reputable law firms operating in the best interests of debtors. Much of the money was funneled illegally to the owner of the group and other scheme participants.

The FTC's complaint filed in June 2014 was the result of an investigation into fraudulent practices throughout the consumer debt industry. The most recent announcement means that second group is now required to strictly follow the FTC's telemarketing rules and provide evidence that supports any claims it makes about its financial services and products.

Source: Real Estate Rama, "Marketers Banned From Mortgage Relief and Debt Relief Services Industry in Settlement with FTC," Federal Trade Commission, April 3, 2015

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